Growing expectations that the US central bank may start to unwind its massive economic stimulus program in December has pushed the Australian dollar below US93¢ for the first time in months.

But currency traders are keeping year-end forecasts for the dollar intact in the belief that the downward pressure will be short lived.

The Australian dollar had traded down to US92.93¢ just after 10am AEDT and by 1pm it had recovered to US93.06¢, compared with US93.32¢ at Tuesday’s local close.

A mini-flash crash in the local currency during the New York trading session also raised concerns and indeed unanswered questions. Around 4am AEDT, the local currency dipped as low as US92.72¢ from US93.3¢.

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Westpac Banking Group currency strategist Sean Callow, who has an end of year target of US95¢ for the Australian dollar, said the sharp drop was indicative of some of the “unease" in currency markets, although he added that he did not know what the actual trigger for the fall was.

The currency has largely traded around US94¢ to US95¢ for many weeks following the US Federal Reserve’s September decision to maintain its $US85 billion a month bond-buying program.

The majority of currency traders now believe the Fed won’t taper stimulus until March at the earliest.

“Our suspicion would be, even though the October US payrolls data was firm, there is going to be enough question marks around the data. Unless November is also strong . . . it still seems the Fed won’t move until the first quarter," said RBC Capital Markets fixed-income and currency strategist Michael Turner.

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Just last week, RBC Capital Markets raised its year-end currency forecast to US98¢ from US88¢ in response to the Fed not tapering in September and bets that it won’t move until March.

Westpac maintains the view that the Fed won’t taper until the second half of next year at which time the Reserve Bank of Australia will be at the end of its rate-easing cycle.

“It does seem that the market wants to run with this story – an earlier move to taper – than had been assumed after the government shutdown. That is to run with the case that the strong jobs data is a game changer for the Fed," said Mr Callow.

“It is vital to our view that the Aussie recovers. In order to get to US95¢, it may be that the Aussie remains under pressure until we get confirmation of no tapering from the Fed on December 18," he said.

UBS Australia chief economist Scott Haslem expects the Australian dollar will trade at US90¢ by the end of this year. Commonwealth Bank of Australia currency strategist Joseph Capurso sees the dollar ending the year at US93¢. And Deutsche Bank has an end-of-year forecast of US98¢, among the highest of the investment banks.

The currency briefly traded as low as US88¢ in August as investors digested better US economic data.

But since then, economic data has been choppy and it has only been since mid-October, with the end of the US government shut down coupled with last week’s better payrolls data and gross domestic product data, that analysts have started to revisit the idea of the Fed tapering before next year.

Helping to fuel speculation that the Fed is closer to tapering were comments by Fed Bank of Dallas president Richard Fisher on Tuesday, who suggested the US central bank might consider a reduction of stimulus in December due to monetary accommodation becoming more risky.